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Taiwan Semiconductor Manufacturing Co Ltd ADR TSM

Morningstar Rating
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Stock XNYS Rating as of
$136.58 +3.61 (2.71%)
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As of Delayed Price Post-Trading: $138.43 +1.84
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Company Report

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TSMC Earnings: Shares Cheap as Cautious Capital Spending and Industry Outlook Dent Sentiment

Phelix Lee

We keep our TWD 950 per share fair value estimate for wide-moat Taiwan Semiconductor Manufacturing (lowered to USD 146 per ADR from USD 151 with an updated exchange rate) as there is no change in the company’s long-term thesis. TSMC’s disciplined approach to capital spending in 2024—and possibly in the next few years—reduces risks of oversupply, and allows more flexibility in cutting-edge research to maintain its leadership. TSMC’s shares remain attractive, as artificial intelligence-related demand continues to pleasantly surprise us, and there is limited downside to sentiment for the automotive and industrial markets.

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Price vs Fair Value

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TSM is trading at a 9% discount.
Price
$133.43
Fair Value
$397.00
Uncertainty
Medium
1-Star Price
$857.50
5-Star Price
$948.30
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

TSMC should consistently earn higher gross margins than competitors thanks to its economies of scale and premium pricing justified by cutting-edge process technologies.

Bears

Although TSMC is the foundry leader, each generation of process technology matures and commoditizes quickly, forcing the company to deal with pricing pressure.

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Trading Information

Previous Close Price
$132.97
Day Range
$128.86–137.84
52-Week Range
$81.21–158.40
Bid/Ask
$137.90 / $138.44
Market Cap
$708.44 Bil
Volume/Avg
17.9 Mil / 16.4 Mil

Key Statistics

Price/Earnings (Normalized)
25.83
Price/Sales
9.97
Dividend Yield (Trailing)
1.45%
Dividend Yield (Forward)
1.45%
Total Yield
1.45%

Company Profile

Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with almost 60% market share. TSMC was founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors. It went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. Furthermore, the shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple, AMD, and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs. TSMC employs more than 73,000 people.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Large Growth
Total Number of Employees
73,090
Website
https://www.tsmc.com

Competitors

Valuation

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Metric
TSM
GFS
005930
Price/Earnings (Normalized)
 25.8320.4637.11
Price/Book Value
 6.202.361.51
Price/Sales
 9.973.561.81
Price/Cash Flow
 16.829.999.46
Price/Earnings
TSM
GFS
005930

Financial Strength

Metric
TSM
GFS
005930
Quick Ratio
 2.031.561.79
Current Ratio
 2.332.112.59
Interest Coverage
 77.59—8.15
Quick Ratio
TSM
GFS
005930

Profitability

Metric
TSM
GFS
005930
Return on Assets (Normalized)
 16.17%7.23%4.31%
Return on Equity (Normalized)
 26.53%12.66%5.57%
Return on Invested Capital (Normalized)
 19.43%9.89%4.52%
Return on Assets
TSM
GFS
005930
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